The renowned EB-5 Immigrant Investor Program provides EB-5 investment funds for local businesses, thus strengthening the U.S. economy. Moreover, EB-5 visas have enabled thousands of foreign nationals and their families to relocate to the United States. Since United States Citizenship and Immigration Services (USCIS) performs a thorough source-of-funds evaluation on each EB-5 investment, the public can be confident that EB-5 investment funds are always lawfully sourced.
Despite its remarkable success, the EB-5 program has often been affected by governmental policy changes. For example, the divisive EB-5 Modernization Rule was implemented in November 2019, leading to a considerable rise in the minimum EB5 investment amounts.
Furthermore, June 2021 proved to be a volatile time for the EB-5 program. On June 22, 2021, a district court ruled that the Modernization Rule had been enforced unlawfully and that the higher minimum investment amounts had to be lowered. Then, the regional center program was suspended on June 30, 2021, leaving the EB-5 investment industry in a state of uncertainty.
These two important developments will have a significant impact on the EB-5 program. Perhaps the most evident change will be a renewed interest in direct EB-5 investments.
The Benefits of Direct EB-5 Investments
Direct investment projects typically give investors greater control over the use of their EB-5 investment funds. Thus, EB-5 investors seeking large profits in addition to permanent resident status frequently favor direct investments. Additionally, foreign nationals making a direct investment only have to invest $500,000 for targeted employment area (TEA) projects and $1,000,000 for non-TEA projects due to the deauthorization of the Modernization Rule.
Foreign nationals who opt for a direct EB5 investment also benefit from greater stability—while the regional center program is dependent on governmental action, direct investments are not. Due to the sudden policy changes in the first half of 2021, many foreign nationals will likely find direct investments appealing.
Regulations on Direct EB-5 Investments
To make a successful EB-5 investment, foreign nationals must create a minimum of 10 jobs, use lawfully sourced funds, and invest in an authorized new commercial enterprise (NCE). Direct EB-5 projects must also fulfill strict job creation criteria: they cannot count indirect or induced employment, so all created jobs must appear on the project’s payroll.
There are many options for foreign nationals considering a direct EB-5 investment—the available projects usually span several industries. Regardless of the industry, however, investors should make sure to carefully research each investment opportunity.
